Roller coaster riding through life takes as much out of you as the amusement rides at a park. Whatever it may be that causes energy to do, we have ups – moments of purity, and we have downs – times when we are just down, lost, whatever.

Significance

Book: The Power of Full Engagement

The rides up and down, have to and will happen but the thing about them is that they don’t have to be as dramatic. The ups can be as high as we would like, but the falls don’t have to be as low as they currently are.

James Loehr and Tony Schwartz author an explanation of the energy fluctuations that everybody experiences and why we cannot sustain a steady flow of high performance.

The answers begin with concept that every period of extreme or continuous high performance resides is only as good as the time spent in recovery. This doesn’t mean that both are equitable, but that they are both necessary. Just as a physical work out requiring unusually high exertion of effort will rip the smallest muscle fibers, the recovery of 1 to 2 days will not only rebuild the muscle, but make it stronger in the body’s anticipation of having to sustain that sort of effort again.

James Loerh

Getting back more than what was put in, is always a smart investment. In the same breath, too much recovery time will atrophy the muscle, weakening it so it will not be able to sustain the previous performance.

This is applicable to all types of energy efforts. Whether you are a mom or dad trying to balance the household duties of kids and laundry and dinner and whatever, or whether you are a professional athlete needing to excel on a regular basis in order to maintain the huge contract you just signed. If creating through mental concentration is what is needed

Tony Schwartz

continually, a recovery is just and valuable as the genius idea.

How to? Well, there is a science to that, so check the next posting for it.

Jim Collin’s fantastic book, “How The Mighty Fall”, teaches that the third stage for a company that is falling or failing is “Reaching For Salvation”.

This imparts a sense severe desperation on behave of the company and big decision makers. As the once success of the company seems to be under the examination by a higher power, beyond the control of the company, who is slow separating, cutting, pulling and breaking parts of what the company was once so solid in.

In an attempt to halting this operation, those with the most beneficial interest in stopping the fall and the torture are those able to make the significant decision that will “save” the company.

The situation has put everyone who really cares (those not sharpening and sending out resume’s as a fail safe) in a need, hope and fear position. Hardly what is healthy for correcting wrongs, identifying corrective actions and pursuing initiatives with passion. Struggling to come up with an answer when you have tried cause you to reach for salvation, not because you want to, but because you feel like you need to.

The action typically involves some sort of “savior” solution. A person or product or structure where all the eggs are put into. It is like being in Vegas, not having enough money to get home because weekend had started off well, but quick dissolved and with you last dollar you put it into the slot machine, literally praying for some divine intervention that can save you bacon.

There isn’t a calculated solution or a proven process, just a final change in an attempt to succeed. At first there is a positive reaction. Not because of the reach but because all others have a renewed hope and work effectively and with passion toward effective, high performance. It is short-term.

Eventually, the reality comes to fruition and all realize that it is on them, not something or someone else. They collapse under the realization and expectation.

This is not to say that all situations play out the same way. Not all outcomes are demise and failure. Few learn that it is in their innate ability that they rose to greatness, and it requires the same characteristics to re-rise or rise again. But that is for another posting.

Salvation is spiritual (an physical, in my opinion), however it is not business and there are is not a divine interest in building your company (just a divine interest in building you, in my opinion).

How is it possible to have loads of money and be as content and comfortable as seemingly possible and then is a relatively short amount of time be bankrupt?

Only fools would allow something like this to happen, right? Surely it would have to be the uneducated or the superficially smart or the short-term-only thinker, right?

The answer, of course yes . . . and at the same time a fog horn – NO!

What Is Your Actual Net Worth?

I was once told that you should manage your personal finances the same way a company would manage theirs. Balance sheets, proformas, cash flow statements, general ledgers and whatever additional form of analysis and reporting you can manage to find a use for are applicable not just to the C Corp but the Self Corp.

With all of these tracking and analysis pieces, how could a person or company lose track of what is most vital in running a business and in the very same sense, how could a person lose track of their ability to provide for themselves or even a family when they see everything going on? CASH is the problem.

In every case, whether it is as grand as a company like GM or as small as a person recently into their profession, cash flow builds them up or cash flow crumbs them and their ego into nothing.

You could have the strongest heart in the world and without blood and good blood, your body will, in very short order stop working. Cashflow is the bloodflow of operating and sustaining. Having a net worth of a million or billion or several billion, can do little to support you if that “worth” if stuck. If you have your money tied up in, you name it, a house, a product, a marketing plan, an accounts receivable, and accounts payable, whatever. If you are in a hands tied position with your value, your worth, something that is not money but has a dollar sign tied to it, and you actually need cash, immediately transferable value, in other words “liquidity”, it doesn’t matter how much you are worth.

Cash Is King

In short order your cashflow net worth can be zero or negative when it comes to cashflow; in turn reducing your ability to draw out any value in your actual net worth.

The caution: You are only as valuable as you have cash to operate. Don’t put all of your liquidity into less than immediate returns.

As a quick sub-post to How The Mighty Fall, stage one of the fall, as Jim Collins puts it, is the evolution of hubris. The characterization of becoming overconfident in ones abilities, creating and “everything I touch turns to gold” type of approach to maintaining (although the hubris is not conducive to maintaining, so this is somewhat said tongue in cheek) or growing a business.

Can the hubris nature be at a lower level in the company? Typically not. In fact, it is usually quite the opposite. As with most structural situations where hubris exists, leading a company to an unhealthy confidence is usually an false emotion distilled by the top of the company.

The lower levels; those crunching the numbers, doing the market research or responding to the customers are those who first become unweary at the sight of such confidence, asking, “Do they really not see what could happen?” They are those presenting caution in their findings, but often falling on deaf ears of because those ears a this hubris filter that only allows findings and research that reinforces that great achievements of the company.

The leader is so confident that they are forward facing, that they mistake their vision for a mirror, presenting them only with historicals and blocking the actual view. Just as if they were driving their care with the hood up, the leader things that they drive well enough that they can still respond to any potential dangers, when in fact, their vary actions of allowing this to take place are a danger. It isn’t that they aren’t aware of the possible danger, they are actually promoting it.

As the story goes of the drive who is able to drive the vehicle over the mountain pass with treacherous terrains and at one point requires tremendous skill to take the vehicle through a narrow pass, where a mountain side is on one side and a stark cliff falls off immediately on the other. The owner of the product that needs to make it over the pass interviews drivers with most expressing how close they can come to the edge without falling off, while one drive expresses that he will do everything to stay as far away from the edge as possible. Of course the interviewer goes with the “safest” solution.

Many hubris situation have a “pushing the envelop” sort of approach” (not result), which is what poses the danger. This arrogance has a precondition of success, regardless of the field and often leads to a lack of preparation or a reckless disregard of the facts and cautions.

Often these hubris leaders throw the lower level employee, expressing caution and restraint, under the bus and in some cases label them as not being a team player or not fit for the company.

Good for the employee, they have the chance to find the right leadership and avoid the painful fall into stage one and likely onto stage two of Jim Collin’s description.

Is a book by the business guru, Jim Collins, on how great companies fall apart really necessary or timely, when we face a recession. Not to discount anything other that the timing of the book, wouldn’t it be obvious that even great companies have the real possibility of being exposed to failure.

Of course Mr. Collins didn’t build his study around a recession, nor was the timing to develop a related topic simply around a world wide economic crisis. The book isn’t about banks and financial markets. It isn’t about the real estate or mortgage industries, although none of these industries are immune from failure, as we have all observed during the last two years.

The research for How The Mighty Fall is in part to disclose and discover how once great and even unparalleled companies can succumb to arrogance, misguided drive, fearful pursuits and suffocating paralysis. Despite the possibility to stumble over their own feet, the great companies kneel in humility in the hope to regain significance. Many don’t, but some do.

Mr. Collin’s objective is not only to overcome the potential digression, but first to act as a warning to all others of how to know you are entering or passing through stages of decline. The hope would be to recognize this but also to prevent it. If a company where to find themselves within a stage of decline, they could then also learn from Mr. Collin’s book to pick up from where they are and follow the success a few who have managed to change their poor evolution and resort back to the initial drive that allowed them to recall who they were before. Acting according the the entrepreneur nature of somebody who has everything to lose, but is willing to put in all of the time, effort and risk to achieve. The attention to detail of the entrepreneur is what guides the giant to recreating their historical drive and nature.

Over 256 pages, Jim Collins will disclose his findings. The read is relatively quick and to the point with sufficient examples to allow the reader to create similar circumstances. Discovering the five stages of decline may help identify what stage you could be in. These observation are not groundbreaking, however, as with many fantastic observations, it is in the recognition and identification that we epiphanize real truth

Excellent read and for any business mind, work the time. I prefer the book to the Jim Collin’s read, as he is slightly too dramatic for my tastes. Looking past the characterization of Mr. Collins, the content is the meat needed and wanted. At least pick it put at the library.

Strolling through B&N this week I came across a book about the major Ponzi scheming events of recent with the largest scam ever in the 65+ billion dollar thievery.

Madoff Arrested

Wow, all I can say is that the first two books are out and there will be several more as the months pass and as the stretching impact. I sat down and starting reading the more credible of the two books, To Good To Be True. Since this is an extreme “precursor” to the book itself, I think because most people will find that they are impacted by or know somebody personal who has been impacted by Bernie Madoff’s trickery and unparalleled theft it is worth mentioning.

In just the first 50 pages or so (which I read while in the store and plan on buying the book in the coming days) I found two major things that I think are worth mentioning. First, Bernie plead guilty, which for most of us think is a great thing, an admittance of wrong doing. To the victims, this was a slap in the face, since this is the point that Madoff was going to make, that nobody else was involved and that he wasn’t going to cooperate with finding out all of the detail and involvement in the scam

Second, we find that Madoff had a close and influential relationship with the SEC. This will lead to why he wasn’t investigated fully, when well warned a decade before the arrest, which could have saved millions, if not billions of dollars for investors.

Noeleen G. Walder of the New York Law Journal recently posted and updated to the happening of the Bernard Madoff case, specifically regarding the work that Irving H. Picard of Baker & Hostetler has been performing in the effort to recoup investor funds.

Although there has been much infighting to who is deserving of how much of the recovered funds, the report is that $1.5 billion in assets has been gathered. See law.com’s report here.

As significant as the $1.5 billion is assets is, when considering the overall Bernie Madoff fraud via ponzi in the $60 to $70 billion, we are talking about 2.1 to 2.5 percent of the overall take. This does not account for how much of that $1.5 billion will be assessed to fees and costs associated with the recovery itself. The investors may be looking at a 2 percent return, however the likelihood of it dropping below that mark is high.

The infighting for who deserves how much really becomes a true cause for concern and although the officials involved with do their best to be fair, the wise and resourceful investor will seek to be held and to make an early claim on the recovered funds, with the consideration that their entitlement is arguably better or more necessary than others’ claims.

others. In total Irving Picard believes about $30 million has been spread through these ventures, which are believed to give some beneficial interest to Madoff family members.

Among those being sued for this $30 million are Bernie’s wife, Ruth, sons Andrew and Mark, brother Peter and niece Shana. Let’s see, after and over the decades of fraud, do any of these parties who ever due or received money from any

Irving Picard

Madoff company, can they really think that they have a leg to stand on. The sons are contesting the suit via their attorney and it would be surprising if the others don’t.

I am sure all of the world that is falling apart, as they knew it, is only getting worse and should end with the inevitable of facing a 40-hour a week gig with some garnishment hanging over their head, although some of that will be lost to the attorney fees they will pay to keep from form such a judgment.

Good luck Picard – get it all – we are cheering, whether you care or not.

UPDATE: November 10, 2010,

And now OWN a piece of MADOFF. The auction of items from two of his homes puts a historic possession in your hands. Take a piano and burn it, grab a desk and smash it, frame his embroidered slippers like a Capone tommy gun – whatever. The next step is getting money due the investors of the worlds largest ponzi scheme

The string of arrests continues and will continue as the FBI, SEC and other organizations continue to comb through decades of information and draw connections to what should and is expected to be a rather sophisticated infrastructure. For a successful and long as the scheme was, Madoff’s guilty plea cannot keep all responsibility to the crime. Although there have only been five arrests now made, in addition to Bernie Madoff himself, time should deliver a more complete result . . . meaning more criminals who knew and did nothing to stop the crime.

Overnight Joann Crupi and Annette Bongiorno were arrested by the FBI in connection to the Ponzi scheme. One was living in New Jersey at the time of the arrest and the latter in Florida.

We will watch the slow churn continue.

Resource: New York Times, 2 Former Madoff Aides Are Arrested (see article here)

UPDATE: January 13, 2011

PAYDAY!!! At least $7.2 billion, yes with a “b”. As the recovery of the largest cash turnover in US history is handed to Irving Picard, a bankruptcy judge approved the distribution of those funds among the victims of the unparalleled scheme.

The money was relinquished by the widow of Jeffry Picower, who had invested $619 million and withdrew over $7 billion since the 1970’s. Although Mrs. Picower continues to hold to her stance that her husband knew nothing of the fraud taking place, the “interest” earned was so high that it says otherwise.

Finally some relief for the general population of victims.

Irving Picard has also pursued many others who withdrew more than they invested during the operations of Madoff’s ponzi plan.

The book Tribes by Seth Godin at first blush was just another book that is trying to take a new angle on an old topic. There is so much on leadership available to read that rehashes the same ideas (albiet with a different style of communicating with each author).

Book Review

I personally enjoy Mr. Godin’s work and his style, so of course, I purchased the book to see what else he has to say on the topic.

Now, I am not going to say that I learn an brand new way of thinking or see, however I am going to say that the clarity of exploring leadership and the art of leading really developed in my mind by considering the core of Mr. Godin’s message. Challenging the status quo is not a new idea, however utilizing abnormalities of acceptance in a way that is acceptable to you and even instigates enthusiasm and excitement is the key and solution that most are unwilling to approach.

Developing a “following” is not the same as what Mr. Godin indicates is a “tribe”. A following are those willing to listen and attend, however there is a new level with tribes, since these people are willing to act, explore and produce accoridngly. The topic really doesn’t matter and we are not just talking about business.

Building atribe starts with YOU. It is you interest, your promotion and your drive that builds other to be intrigued to follow and then you continued challenge that drives changes that engage followers to join the tribe.

Conceptually the topic is very apparent and considering Mr. Godin’s examples, the results appear to be very promising and possible. It is worth exploring the people referred to and through your own analytical approach, contrasting their experience to your own and obviously, identifying the opportunities.

I would definitely recommend this book to those with the patience to not just read, but considering through repeated study the application, defining the application and pursuing the experiment of adapting it. This is not a book for those who just want to be presented an idea to add to their bank of knowledge.